Production Resumes in the Wake of War
The war in the Pacific ended on August 15, 1945. In its wake, total estimated damages amounted to 105.7 billion yen, equivalent to Japan's GNP for 1946. Compared to some other industries, the automobile industry did not suffer extensive direct damage from the war. However, with steel and other materials being extremely difficult to procure, production had dropped by 50% by the end of the war.
In response to the automobile manufacturers' desire to resume production, and with the postwar reconstruction process creating a growing demand for trucks for freight traffic, the GHQ (General Headquarters of the Allied Powers) issued permission as of 1945 for as many as 30 different companies to enter into truck production.
Automobile Production Policies of GHQ
Truck production, once resumed, did not develop as rapidly as anticipated, hindered by difficulties in obtaining new parts and materials, uneven quality, restrictions in the use of electricity and frequent power failures, among other factors. To sustain themselves over this awkward transition period, automobile manufacturers began producing agricultural equipment, tools, and pots and pans to ensure the livelihood of workers experiencing not only unprecedented inflation, but also difficulties in securing essential daily supplies as well as acute housing shortages. Employers even had to grant "food holidays" to allow employees the opportunity to obtain food for themselves.
As reconstruction progressed, the production ambitions of automobile and auto parts manufacturers increased. In response, in June 1947 the GHQ permitted the manufacture of small (under 1500cc) passenger cars, limiting production to 300 units per year. At the same time, to help counteract massive unemployment, the U.S. Army instructed automobile manufacturers to take on the repair of its own damaged vehicles. This helped manufacturers stem the flow of red ink, and provided them with the opportunity of studying the work methods and repair techniques practiced by the Americans.
Deflation, Layoffs and Labor Disputes
As a consequence of tight government finance and banking policies that had been adopted under the guidance of GHQ to suppress inflationary tendencies in the aftermath of the war, Japan was struck in 1949 with a major recession that dealt a severe blow to the automobile industry. Automobile manufacturers were forced to cut wages and implement layoffs, and from June 1949 to June 1950 slashed employment by 23% (6,200 persons). Under these distressing conditions, labor unions confronted management and all the major manufacturers were hit by the most prolonged strikes in Japanese labor history.
Promoting Vehicle Safety
To help promote the motor vehicle industry and the implementation of automobile technologies, the Ministry of Commerce and Industry introduced performance tests in 1947 for domestically produced vehicles, and in June 1951 the Road Vehicles Act was passed. The aim of this law was to promote automobile safety by requiring manufacturers to apply for official approval by the Ministry of Transportation for each new vehicle type to be produced (the same type approval system was to be applied to imported vehicles as well). These two measures played a significant role in improving the quality of domestically manufactured automobiles.
Creation of Automotive Trade Associations
A slight improvement in the supply of materials required for automobile production prompted the formation of various organizations representing different sectors of the industry. The first organization to be established was the Automobile Industrial Association, founded in April 1948 by five companies including Toyota and Nissan. The Japan Auto Parts Industries Association was created next, and the Midget Motor Manufacturers Association as well as the Japan Auto-Body Industries Association were established soon thereafter.
